CEE MARKETS 2-FX retreats, trade surplus supports forint

Сотрудники Reuters

ВРЕМЯ ЧТЕНИЯ 6 МИНУТ

* Hungary posts 719.8 mln euro May trade surplus
* U.S. non-farm payrolls data eyed for direction
* Romania, Czech industrial output rise in May
(Adds bonds, updates prices)
BUDAPEST, July 8 (Reuters) - Emerging European currencies
eased slightly on Friday, paring Thursday's gains, with the
forint holding near 14-month highs versus the euro after Hungary
reported a huge trade surplus for May.
The forint on Thursday hit its strongest level in
more than 14 months at 261.90 to the euro, helped by foreign
demand.
The European Central Bank's comments supporting Portugal
lifted the euro, which in turn helped central European
currencies as the euro is the region's reference currency.
At 0948 GMT, the forint -- central Europe's top
performer with a 5.7 percent gain so far this year -- traded at
262.9 versus the euro, down 0.4 percent.
The Polish zloty eased 0.3 percent, the Romanian
leu dropped 0.1 percent, while the Czech crown
was flat.
Data showed on Friday that Hungary posted a trade surplus of
719.8 million euros in May based on preliminary
data, far exceeding analysts' median forecast for a 464.5
million euro surplus.
"If we manage to maintain such a favourable pace this year
(i.e. domestic demand remains moderate, in line with our
expectations), the trade surplus could be above 7 billion euros
this year," said Gyorgy Barta, analyst at CIB Bank.
"The result is forint-positive and growth-positive."
Dealers said U.S. data later in the day would set the mood
for the afternoon session.
"U.S. non-farm payrolls data is the key event today and
decisive for the sentiment," a Raiffeisen Bank Polska dealer
said.
"Before the reading I expect the zloty to remain below 3.95
per euro, better-than-expected data may prompt the zloty to test
the level of 3.92."
A positive U.S. non-farm payrolls report on Friday could
further boost global risk appetite and support central European
assets, traders said.
"If the euro firms after U.S. non-farm payrolls later today,
then it would also strengthen the region," one Bucharest-based
trader said.
A Reuters poll forecasts U.S. non-farm payrolls rose by
90,000 in June. The data is due at 1230 GMT.
Romania's adjusted industrial output rose 1.6
percent on the month in May and 8.0 percent year-on-year, data
showed on Friday.
Separate data showed a strong reading on Czech industrial
output, which rose 15.2 percent year-on-year in May, nearly
double analysts' forecasts of 8.5 percent and following 4.7
percent growth the previous month.
BONDS RESILIENT
Dealers said central European government debt markets have
been resilient to the debt crisis in the euro zone periphery.
"The bond market has proven its strength, it was immune to
the recent developments concerning Portugal. On top of that the
supply is limited, so it is unlikely that prices will fall", a
Warsaw-based dealer said.
The supply of Polish bonds has been limited after the Polish
finance ministry at the end of June decided to reduce the number
of tenders and said it would not sell treasury bills in the
July-September period.
Hungarian government bond yields stabilised in quiet trade
after Thursday's falls, tracking gains in the forint, which took
some market players by surprise, a fixed income trader said.
"Yesterday's gains in the forint sparked panic reactions
among some people, many were scared on the interest rate front
as well, which led to some short-covering when the forint firmed
past 262 per euro," the trader said.
The trader said the market was divided over whether the
central bank, which has kept interest rates on hold at 6 percent
at its past five policy meetings, would react to the forint's
strength with an interest rate cut.
"The forint has been incredibly resilient over the past half
year despite what is going on in the world," the fixed income
trader said.
Stock markets across the region were mixed, with Budapest
down 0.2 percent, Prague easing 0.5 percent , while
Bucharest was flat.
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2011
Czech crown 24.203 24.222 +0.08% +3.29%
Polish zloty 3.943 3.932 -0.28% +0.38%
Hungarian forint 262.8 262.08 -0.27% +5.78%
Croatian kuna 7.389 7.37 -0.26% -0.12%
Romanian leu 4.196 4.195 -0.02% +0.88%
Serbian dinar 101.2 100.53 -0.66% +4.67%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
2-yr T-bond CZ2YT=RR -6 basis points to -4bps over bmk*
7-yr T-bond CZ7YT=RR 0 basis points to +71bps over bmk*
10-yr T-bond CZ9YT=RR -3 basis points to +87bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR +3 basis points to +326bps over bmk*
5-yr T-bond PL5YT=RR +5 basis points to +318bps over bmk*
10-yr T-bond PL10YT=RR +3 basis points to +283bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +1 basis points to +496bps over bmk*
5-yr T-bond HU5YT=RR +2 basis points to +487bps over bmk*
10-yr T-bond HU10YT=RR -1 basis points to +427bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1142 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaux; Writing by Krisztina Than,
Gergely Szakacs; Editing by Hugh Lawson)